Clarity demanded from Alexander after UK coalition’s Carbon Storage confusion

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By a Newsnet reporter
 
The SNP have demanded clarity from the UK Treasury over the status of the £1 billion Carbon Capture and Storage (CCS) funding after conflicting messages from UK Ministers.
 
The calls follow apparent confusion between Treasury Chief Danny Alexander and UK Energy Minister Charles Hendry over the availability of investment for a demonstration CCS project.

The confusion began when Lib Dem MP Alexander appeared to go back on an earlier promise given by the UK coalition to ring fence the funding originally earmarked for Longannet, which was scrapped in October.

In an interview the Lib Dem Treasury Chief shocked the industry by announcing that the £1 billion would instead be diverted in order to fund infrastructure projects south of the border.

However, following a recent parliamentary question from SNP Energy spokesperson Mike Weir , UK Energy Minister Charles Hendry has contradicted his coalition colleague by claiming that CCS funding will indeed go ahead this year.

He said: “£1 billion remains available to support CCS projects.  I expect CCS projects to come forward in this spending review period and for some expenditure to be committed as part of that process.”

SNP Westminster Energy spokesperson Mike Weir has now written to the Chief Secretary Danny Alexander demanding an end to the uncertainty and a guarantee that the funds remain immediately available.

Mr Weir said:

“Confusion reigns between UK Ministers over the status of the CCS fund, and we must have answers from the Treasury Secretary who created this uncertainty.

“Energy Ministers claim the money is available, but Danny Alexander says the funds have been reallocated – who do we believe?  We must have an end to the contradiction and confusion and a guarantee that this investment is available to support this planet saving technology.

“Given the UK Government’s track record, which saw the first project at Peterhead and, more recently, the project at Longannet, abandoned, we now need a clear guarantee and timetable from the government.  Right now we have a competition without a closing date.”

In October, controversy followed the scrapping of the CCS project at Longannet in Fife after the Tory/Lib Dem government refused to commit the necessary funding.  Longannet had been the last candidate standing in a long running £1 billion contest to find the most suitable site in the UK. 

The decision caused outrage in Scotland and a furious Scottish government accused Westminster of sabotaging the project.  An under pressure coalition pledged that the £1 billion would be ring fenced and used for another CCS project – Peterhead in the north east of Scotland emerged the clear favourite.

On 10th November Lib Dem Secretary of Scotland, Michael Moore said: “… it is vitally important that Peterhead and others come forward with their bids and there’s a billion pounds available to help support them.”

Mr Moore’s statement followed an announcement from Scottish and Southern Energy (SSE) and Shell UK Limited of an agreement to develop a CCS project at the gas-fired power station in Peterhead.

However, Speaking on BBC Radio 5 on 28 November, Danny Alexander appeared to backtrack on the funding pledge and said: “We’re launching a new competition to provide £1bn for CCS but that competition, obviously, is going to take longer, so much of the money that we’d allocated to spend in this Parliament we’ve now reallocated to different sorts of projects.”

Mr Weir insisted that Scotland’s CCS potential should not be scuppered for a third time and added:

“The new project at Peterhead must not be kicked into the long grass beyond the term of this Westminster parliament.

“Pulling investment from carbon capture in Scotland to fund projects south of the Border is not an alternative economic plan – it is more of the same from the London Treasury, which is grabbing a record £13.4 billion of North Sea revenues this year, and short-changing Scotland over carbon capture.

“Scotland has some of Europe’s largest carbon storage reserves in our North Sea oil and gas fields combined with the expertise on how to access them.  And carbon capture investment can also be a key driver of economic recovery in Scotland.  For the sake of both the environment and the economy, we need progress now.

“The Scottish Government is showing that we have what it takes to become the pre-eminent location for clean energy research, development and delivery in Europe – the UK Government needs to stop mishandling Scotland’s renewable future.”

This isn’t the first time Peterhead has faced CCS uncertainty from a Westminster government.  In June 2007, shortly after the SNP won the Holyrood election by one seat, the then Labour chancellor Alistair Darling confirmed that the UK government would not be committing funds to a waiting carbon storage project at Peterhead – the project was scrapped as a result.

The Peterhead project would have been the first industrial scale project in the world to combine three separate technologies – hydrogen production, power generation and carbon capture and storage – to generate electricity using hydrogen from natural gas.

If Peterhead fails in its latest bid for Westminster funding it will be the third time Scotland’s CCS potential has been hampered.